Evolution Petroleum Announces Results for the Fiscal 2020 Second Quarter Ended December 31, 2019 and Declares Quarterly Common Stock Dividend

HOUSTON, TX / ACCESSWIRE / February 5, 2020 / Evolution Petroleum (NYSE American:EPM) (“Evolution” or the “Company”) announced today financial results and operating highlights for its fiscal second quarter ended December 31, 2019 (the “current quarter”).

Highlights for the Quarter:

  • Acquired oil producing assets in Hamilton Dome Field in Wyoming for $9.3 million of cash, net of a $0.2 million post-closing adjustment.
  • Paid 25th consecutive quarterly cash dividend on common shares and declared the next dividend payment of $0.10 per share, payable on March 31, 2020.
  • Generated total revenues of $9.4 million for the quarter, up 2.5% from the prior quarter.
  • Reported net income of $1.8 million, marking the 17th consecutive quarter of positive reported net income.
  • Ended the quarter with $20.9 million in cash; the Company has a $40 million undrawn credit facility and notably remains debt free.

“We successfully closed the acquisition of the Hamilton Dome field on November 1, 2019 and seamlessly incorporated the interests into our overall operations, with minimal disruptions or costs” said Jason Brown, President and CEO. “This was a solid first step in the Company’s strategy to diversify and grow our asset base. Hamilton Dome is meeting our projections of production, price realization and cash flow without a material increase in our overhead. Similar to other oil and gas producers, our overall performance during the quarter was impacted by lower price realizations, and further impacted in our case by the short-term effect of repairs to the oil sales pipeline from Delhi, which more than offset increased volumes. This is a good example of why we are pleased with the Hamilton Dome acquisition as a second source of cash flow and are committed to further acquisitions that will support our dividend. The current weakness in oil and gas prices presents an opportunity to acquire long-life production with upside potential at a very attractive price per BOE and validates our decision over the recent years to retain substantial liquidity with no debt. I am proud that we continue to generate earnings and positive cash flow during low commodity price environments as demonstrated by twenty-five consecutive quarterly dividends and seventeen consecutive quarters of positive earnings.”

Financial and Operational Results

Evolution reported total revenues for the quarter of $9.4 million versus $9.2 million in the prior quarter, a 2.5% increase, based on an 11.2% increase in total volumes, offset by a lower average realized oil price of $53.38 per barrel compared to $59.32 per barrel in the prior quarter. This decline was partially offset by an increase in the average realized NGL price of $14.92 per barrel of oil equivalent (“BOE”) compared to $11.54 per BOE, in the prior quarter.

The current quarter revenues benefited from approximately $1.1 million in oil revenue sales for the recently acquired Hamilton Dome field, representing Evolution’s share of sixty-one days of production. The Hamilton Dome oil production trades at a discount to West Texas Intermediate based on its specific gravity and sulfur content.

At the Delhi Field, the current quarter’s lower average realized oil prices were further impacted by approximately $0.4 million for temporary trucking and handling charges due to the planned repair to a section of the oil sales pipeline. This effectively eliminated the LLS premium in the quarter, shifting a positive basis to a small deduction. The pipeline repair project commenced in mid-November and was completed in late January, and all Delhi oil sales are back on pipeline as of February 1, 2020.

Total net production in barrels of oil equivalent per day (“BOEPD”) increased 11.2% to 2,124 BOEPD in the current quarter compared to 1,910 BOEPD in the prior quarter. The quarterly results include sixty-one days of production from the Hamilton Dome field, or 292 net barrels of oil per day (“BOPD”), based on sixty-one days of production divided by ninety-two days in the quarter.

Production costs were $4.2 million in the current quarter, an increase of 37% from $3.1 million in the prior quarter. Production costs increased by $0.9 million due to the addition of the Hamilton Dome Field effective November 1, 2019, inclusive of some atypical workovers performed in the field in December. Additionally, Delhi had higher CO2 and other production costs of $0.2 million. Purchased CO2 volumes were 83.6 million cubic feet (MMcf) per day, up 19.9% from 69.7 MMcf per day in the prior quarter.

General and administrative (”G&A”) expenses increased by $0.1 million, or 7.3% to $1.4 million for the current quarter, compared to the prior quarter. Increased G&A expenses are primarily attributable to normal variations in professional service expenses often incurred during our second fiscal quarter.

Net income for the quarter was $1.8 million, or $0.05 per diluted share, compared to $2.8 million, or $0.08 per diluted share, in the previous quarter.

Capital Spending

During the current quarter, Evolution incurred $10.7 million on capital projects consisting of $9.3 million for the acquisition of Hamilton Dome field, a $0.9 million non-cash asset addition related to Hamilton Dome asset retirement obligations, and $0.5 million at the Delhi field, primarily for the NGL plant and completion of the water curtain project.

The current expectation for net capital spending for the remainder of fiscal 2020 is approximately $0.5 to $0.7 million for conformance and capital workovers at Delhi field, and $0.1 to $0.2 million for capital workovers at Hamilton Dome. The Delhi operator reported that capital was deferred for the Phase V project until 2021. Evolution anticipates all funding for the Company’s share of capital expenditures at Delhi and Hamilton Dome will be met from cash flows from operations.

Liquidity and Outlook

Working capital decreased by $10.0 million from the prior quarter to $21.7 million. The decrease in working capital is primarily due to the acquisition of producing oil field assets in the Hamilton Dome Field in Wyoming for $9.3 million in cash and the payment of $3.3 million in common stock dividends during the quarter. The Company ended the quarter with $20.9 million in cash, no debt and an untapped $40 million reserve-based credit facility. The Company continues to be well positioned to fund further development of its producing assets throughout fiscal 2020 and 2021 while retaining enough financial resources to capitalize on new growth opportunities and funding for the dividend program.

Cash Dividend on Common Stock

The Board of Directors declared a cash dividend of $0.10 per share of common stock, which will be paid on March 31, 2020 to common stockholders of record on March 16, 2020. This will be the twenty-sixth consecutive quarterly cash dividend on the common stock, which has been paid since the quarter ended December 31, 2013. To date, the Company has paid out $66 million or $2.01 per share back to stockholders as cash dividends. Maintaining and ultimately growing the common stock dividend remains a Company priority.

Quarterly Conference Call

Evolution Petroleum Corporation will host its earnings conference call for the quarter ended December 31, 2019 on Thursday, February 6, 2020 at 11:00 a.m. Eastern (10:00 a.m. Central). The call will be hosted by Jason Brown, President & Chief Executive Officer and David Joe, Chief Financial Officer. Details for the conference call are as follows:

Date: Thursday, February 6, 2020

Time: 11:00 a.m. Eastern

Call: 844-369-8770 (toll-free United States & Canada)

Call: 862-298-0840 (toll International)

To listen live via webcast over the internet, click the link https://www.webcaster4.com/Webcast/Page/2188/32893 or go to our website at http://www.evolutionpetroleum.com/. A replay will be available two hours after the end of the conference call through March 6, 2020 and will be accessible by calling 877-481-4010 (toll-free United States & Canada); 919-882-2331 (International) with the replay pin number of 57679.

About Evolution Petroleum

Evolution Petroleum is an independent energy company focused on delivering a sustainable dividend yield to its shareholders through the ownership, management and development of producing oil and gas properties. The Company’s long-term goal is to build a diversified portfolio of oil and gas assets primarily through acquisition, while seeking opportunities to maintain and increase production through selective development, production enhancement and other exploitation efforts on its properties. Evolution’s largest asset is our interest in a CO2 enhanced oil recovery project in Louisiana’s Delhi field. Additional information, including the Company’s annual report on Form 10-K and its quarterly reports on Form 10-Q, is available on its website at www.EvolutionPetroleum.com.

Cautionary Statement

All forward-looking statements contained in this press release regarding current expectations, potential results and future plans and objectives of the Company involve a wide range of risks and uncertainties. Statements herein using words such as “believe,” “expect,” “plans,” “outlook,” “should,” “will,” and words of similar meaning are forward-looking statements. Although our expectations are based on business, engineering, geological, financial and operating assumptions that we believe to be reasonable, many factors could cause actual results to differ materially from our expectations and we can give no assurance that our goals will be achieved. These factors and others are detailed under the heading “Risk Factors” and elsewhere in our periodic documents filed with the Securities and Exchange Commission. The Company undertakes no obligation to update any forward-looking statement.

Company Contact:

Jason Brown, President & CEO
David Joe, SVP & CFO
(713) 935-0122

Evolution Petroleum Corporation and Subsidiaries
Consolidated Condensed Statements of Operations
(Unaudited)

 
  Three Months Ended
December 31,
    Six Months Ended
December 31,
 
 
  2019     2018     2019     2018  
Revenues
                       
Crude oil
  $ 8,974,237     $ 10,515,875     $ 17,819,741     $ 21,913,327  
Natural gas liquids
    406,634       532,243       712,578       1,441,870  
Natural gas
    744             1,511        
Total revenues
    9,381,615       11,048,118       18,533,830       23,355,197  
Operating costs
                               
Production costs
    4,234,605       3,452,168       7,324,694       6,910,598  
Depreciation, depletion and amortization
    1,461,049       1,603,633       2,910,803       3,152,093  
General and administrative expenses
    1,436,197       1,258,570       2,774,550       2,563,832  
Total operating costs
    7,131,851       6,314,371       13,010,047       12,626,523  
Income from operations
    2,249,764       4,733,747       5,523,783       10,728,674  
Other
                               
Enduro transaction breakup fee
                      1,100,000  
Interest and other income
    52,941       59,858       119,070       106,429  
Interest expense
    (29,345 )     (29,345 )     (58,690 )     (58,690 )
Income before income taxes
    2,273,360       4,764,260       5,584,163       11,876,413  
Income tax provision
    508,442       859,695       1,026,425       2,176,047  
Net income available to common stockholders
  $ 1,764,918     $ 3,904,565     $ 4,557,738     $ 9,700,366  
Earnings per common share
                               
Basic
  $ 0.05     $ 0.12     $ 0.14     $ 0.29  
Diluted
  $ 0.05     $ 0.12     $ 0.14     $ 0.29  
Weighted average number of common shares
                               
Basic
    32,988,737       33,167,159       33,057,691       33,134,726  
Diluted
    32,988,737       33,176,503       33,061,555       33,147,775  

* For the three months ended December 31, 2019 and 2018, non-cash stock-based compensation expenses were $236,190 and $254,111, respectively. For the six months ended December 31, 2019 and 2018, non-cash stock-based compensation expenses were $568,203 and $469,484, respectively.

Evolution Petroleum Corporation and Subsidiaries
Consolidated Condensed Balance Sheets

(Unaudited)

 
  December 31,
2019
    June 30,
2019
 
Assets
           
Current assets
           
Cash and cash equivalents
  $ 20,935,968     $ 31,552,533  
Receivables
    4,008,414       3,168,116  
Prepaid expenses
    518,396       458,278  
Total current assets
    25,462,778       35,178,927  
Oil and natural gas properties, net (full-cost method of accounting)
    68,814,569       60,346,466  
Other property and equipment, net
    21,914       26,418  
Total property and equipment
    68,836,483       60,372,884  
Other assets, net
    331,608       210,033  
Total assets
  $ 94,630,869     $ 95,761,844  
Liabilities and Stockholders’ Equity
               
Current liabilities
               
Accounts payable
  $ 2,985,901     $ 2,084,140  
Accrued liabilities and other
    548,676       537,755  
State and federal income taxes payable
    246,972       130,799  
Total current liabilities
    3,781,549       2,752,694  
Long term liabilities
               
Deferred income taxes
    11,362,943       11,322,691  
Asset retirement obligations
    2,493,741       1,560,601  
Operating lease liability
    112,870        
Total liabilities
    17,751,103       15,635,986  
Commitments and contingencies
               
Stockholders’ equity
               
Common stock; par value $0.001; 100,000,000 shares authorized; 33,106,988 and 33,183,730 shares issued and outstanding, respectively
    33,107       33,183  
Additional paid-in capital
    41,306,353       42,488,913  
Retained earnings
    35,540,306       37,603,762  
Total stockholders’ equity
    76,879,766       80,125,858  
Total liabilities and stockholders’ equity
  $ 94,630,869     $ 95,761,844  

Evolution Petroleum Corporation and Subsidiaries
Consolidated Condensed Statements of Cash Flows

(Unaudited)

 
  Six Months Ended
December 31,
 
 
  2019     2018  
Cash flows from operating activities
           
Net income
  $ 4,557,738     $ 9,700,366  
Adjustments to reconcile net income to net cash provided by operating activities:
               
Depreciation, depletion and amortization
    2,910,803       3,152,093  
Stock-based compensation
    568,203       469,484  
Settlements of asset retirement obligations
    (26,773 )      
Deferred income tax expense (benefit)
    40,252       506,297  
Other
    32,149       9,648  
Changes in operating assets and liabilities:
               
Receivables
    (840,298 )     507,689  
Prepaid expenses
    (60,118 )     (70,048 )
Accrued liabilities and other
    875,929       (144,638 )
Income taxes payable
    116,173       13,364  
Net cash provided by operating activities
    8,174,058       14,144,255  
Cash flows from investing activities
               
Acquisition of oil and natural gas properties
    (9,337,716 )      
Capital expenditures for oil and natural gas properties
    (1,080,874 )     (5,048,987 )
Capital expenditures for other property and equipment
          (2,066 )
Net cash used in investing activities
    (10,418,590 )     (5,051,053 )
Cash flows from financing activities
               
Cash dividends to common stockholders
    (6,621,194 )     (6,634,896 )
Common share repurchases, including shares surrendered for tax withholding
    (1,750,839 )     (138,638 )
Net cash used in financing activities
    (8,372,033 )     (6,773,534 )
Net change in cash, cash equivalents and restricted cash
    (10,616,565 )     2,319,668  
Cash, cash equivalents and restricted cash, beginning of period
    31,552,533       27,681,133  
Cash and cash equivalents, end of period
  $ 20,935,968     $ 30,000,801  
Supplemental disclosures of cash flow information:
  Six Months Ended
December 31,
 
 
  2019     2018  
Income taxes paid
  $ 1,100,000     $ 1,862,919  
Non-cash transactions:
Change in accounts payable used to acquire oil and natural gas properties
    39,361       (1,094,249 )
Oil and natural gas property costs incurred through recognition of asset retirement obligations
    871,076       31,268  

Supplemental Information on Oil and Natural Gas Operations (Unaudited)

 
  Three Months Ended              
 
  December 31, 2019     September 30, 2019     Variance     Variance %  
Oil and gas production
                       
Crude oil revenues
  $ 8,974,237     $ 8,845,504     $ 128,733       1.5 %
NGL revenues
    406,634       305,944       100,690       32.9 %
Natural gas revenues
    744       767       (23 )   (3.0) %
Total revenues
  $ 9,381,615     $ 9,152,215     $ 229,400       2.5 %
 
                               
Crude oil volumes (Bbl)
    168,117       149,107       19,010       12.7 %
NGL volumes (Bbl)
    27,260       26,516       744       2.8 %
Natural gas volumes (Mcf)
    356       356           n.m.  
Equivalent volumes (BOE)
    195,437       175,682       19,755       11.2 %
 
                               
Crude oil (BOPD, net)
    1,827       1,621       206       12.7  
NGLs (BOEPD, net)
    296       288       8       2.8  
Natural gas (BOEPD, net)
    1       1           n.m.  
Equivalent volumes (BOEPD, net)
    2,124       1,910       214       11.2  
 
                               
Crude oil price per Bbl
  $ 53.38     $ 59.32     $ (5.94 )     (10.0 )%
NGL price per Bbl
    14.92       11.54       3.38       29.3  
Natural gas price per Mcf
    2.09       2.15       (0.06 )   (2.8) %
Equivalent price per BOE
  $ 48.00     $ 52.10     $ (4.10 )     (7.9 )%
 
                               
CO2 costs
  $ 1,410,213     $ 1,284,767     $ 125,446       9.8 %
Other production costs
    2,824,392       1,805,322       1,019,070       56.4 %
Total production costs
  $ 4,234,605     $ 3,090,089     $ 1,144,516       37.0 %
 
                               
CO2 costs per BOE
  $ 7.22     $ 7.31     $ (0.09 )     (1.2 )%
All other production costs per BOE
    14.45       10.28       4.17       40.6 %
Production costs per BOE
  $ 21.67     $ 17.59     $ 4.08       23.2 %
 
                               
CO2 costs per mcf
  $ 0.77     $ 0.84     $ (0.07 )     (8.3 )
CO2 volumes (MMcf per day, gross)
    83.6       69.7       13.9       19.9  
 
                               
DD&A of proved oil and gas properties
  $ 1,419,333     $ 1,417,754     $ 1,579       0.1  
Depreciation of other property and equipment
    2,182       2,322       (140 )     (6.0 )
Amortization of intangibles
    3,391       3,391             n.m.  
Accretion of asset retirement obligations
    36,143       26,287       9,856       37.5  
Total DD&A
  $ 1,461,049     $ 1,449,754     $ 11,295       0.8  
 
                               
Oil and gas DD&A rate per BOE
  $ 7.26     $ 8.07     $ (0.81 )     (10.0 )%
 
  Crude Oil Revenues     Crude Oil Volumes (Bbl)     Crude Oil Price per Bbl     Other Production Costs  
The current quarterly results above and the current year to date results that follow include those of our interest in the Hamilton Dome field commencing November 1, 2019.
  $ 1,124,695       26,850     $ 41.89     $ 922,736  

n.m. Not meaningful.

Supplemental Information on Oil and Natural Gas Operations (Unaudited)

 
  Three Months Ended December 31,              
 
  2019     2018     Variance     Variance %  
Oil and gas production
                       
Crude oil revenues
  $ 8,974,237     $ 10,515,875     $ (1,541,638 )     (14.7 )%
NGL revenues
    406,634       532,243       (125,609 )     (23.6 )%
Natural gas revenues
    744             744     n.m.  
Total revenues
  $ 9,381,615     $ 11,048,118     $ (1,666,503 )     (15.1 )%
 
                               
Crude oil volumes (Bbl)
    168,117       163,361       4,756       2.9 %
NGL volumes (Bbl)
    27,260       23,701       3,559       15.0 %
Natural gas volumes (Mcf)
    356             356     n.m.  
Equivalent volumes (BOE)
    195,437       187,062       8,375       4.5 %
 
                               
Crude oil (BOPD, net)
    1,827       1,776       51       2.9 %
NGLs (BOEPD, net)
    296       258       38       14.7 %
Natural gas (BOEPD, net)
    1             1     n.m.  
Equivalent volumes (BOEPD, net)
    2,124       2,034       90       4.4 %
 
                               
Crude oil price per Bbl
  $ 53.38     $ 64.37     $ (10.99 )     (17.1 )%
NGL price per Bbl
    14.92       22.46       (7.54 )     (33.6 )%
Natural gas price per Mcf
    2.09             2.09     n.m.  
Equivalent price per BOE
  $ 48.00     $ 59.06     $ (11.06 )     (18.7 )%
 
                               
CO2 costs
  $ 1,410,213     $ 1,504,930     $ (94,717 )     (6.3 )%
Other production costs
    2,824,392       1,947,238       877,154       45.0 %
Total production costs
  $ 4,234,605     $ 3,452,168     $ 782,437       22.7 %
 
                               
CO2 costs per BOE
  $ 7.22     $ 8.05     $ (0.83 )     (10.3 )%
All other production costs per BOE
    14.45       10.40       4.05       38.9 %
Production costs per BOE
  $ 21.67     $ 18.45     $ 3.22       17.5 %
 
                               
CO2 costs per mcf
  $ 0.77     $ 0.90     $ (0.13 )     (14.4 )%
CO2 volumes (MMcf per day, gross)
    83.6       76.3       7.3       9.6 %
 
                               
DD&A of proved oil and gas properties
  $ 1,419,333     $ 1,571,321     $ (151,988 )     (9.7 )%
Depreciation of other property and equipment
    2,182       4,143       (1,961 )     (47.3 )%
Amortization of intangibles
    3,391       3,391              
Accretion of asset retirement obligations
    36,143       24,778       11,365       45.9 %
Total DD&A
  $ 1,461,049     $ 1,603,633     $ (142,584 )     (8.9 )%
 
                               
Oil and gas DD&A rate per BOE
  $ 7.26     $ 8.40     $ (1.14 )     (13.6 )%

n.m. Not meaningful.

Supplemental Information on Oil and Natural Gas Operations (Unaudited)

 
  Six Months Ended December 31,              
 
  2019     2018     Variance     Variance %  
Oil and gas production
                       
Crude oil revenues
  $ 17,819,741     $ 21,913,327     $ (4,093,586 )     (18.7 )%
NGL revenues
    712,578       1,441,870       (729,292 )     (50.6 )%
Natural gas revenues
    1,511             1,511     n.m.  
Total revenues
  $ 18,533,830     $ 23,355,197     $ (4,821,367 )     (20.6 )%
 
                               
Crude oil volumes (Bbl)
    317,224       322,267       (5,043 )     (1.6 )%
NGL volumes (Bbl)
    53,776       48,102       5,674       11.8 %
Natural gas volumes (Mcf)
    712             712     n.m.  
Equivalent volumes (BOE)
    371,119       370,369       750       0.2 %
 
                               
Crude oil (BOPD, net)
    1,724       1,751       (27 )     (1.5 )%
NGLs (BOEPD, net)
    292       261       31       11.9 %
Natural gas (BOEPD, net)
    1             1     n.m.  
Equivalent volumes (BOEPD, net)
    2,017       2,012       5       0.2 %
 
                               
Crude oil price per Bbl
  $ 56.17     $ 68.00     $ (11.83 )     (17.4 )%
NGL price per Bbl
    13.25       29.98       (16.73 )     (55.8 )%
Natural gas price per Mcf
    2.12             2.12     n.m.  
Equivalent price per BOE
  $ 49.94     $ 63.06     $ (13.12 )     (20.8 )%
 
                               
CO2 costs (a)
  $ 2,694,980     $ 2,988,782     $ (293,802 )     (9.8 )%
Other production costs
    4,629,714       3,921,816       707,898       18.1 %
Total production costs
  $ 7,324,694     $ 6,910,598     $ 414,096       6.0 %
 
                               
CO2 costs per BOE
  $ 7.26     $ 8.07     $ (0.81 )     (10.0 )%
All other production costs per BOE
    12.48       10.59       1.89       17.8 %
Production costs per BOE
  $ 19.74     $ 18.66     $ 1.08       5.8 %
 
                               
CO2 costs per mcf
  $ 0.80     $ 0.93     $ (0.13 )     (14.0 )%
CO2 volumes (MMcf per day, gross)
    76.6       72.9       3.7       5.1 %
 
                               
DD&A of proved oil and gas properties
  $ 2,837,087     $ 3,088,063     $ (250,976 )     (8.1 )%
Depreciation of other property and equipment
    4,504       8,286       (3,782 )     (45.6 )%
Amortization of intangibles
    6,782       6,782             %
Accretion of asset retirement obligations
    62,430       48,962       13,468       27.5 %
Total DD&A
  $ 2,910,803     $ 3,152,093     $ (241,290 )     (7.7 )%
 
                               
Oil and gas DD&A rate per BOE
  $ 7.64     $ 8.34     $ (0.70 )     (8.4 )%

n.m. Not meaningful.

SOURCE: Evolution Petroleum Corporation

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https://www.accesswire.com/575119/Evolution-Petroleum-Announces-Results-for-the-Fiscal-2020-Second-Quarter-Ended-December-31-2019-and-Declares-Quarterly-Common-Stock-Dividend

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